House prices down on last quarter finds Halifax House Price Index

by: Edward Murray

Monthly UK house price inflation was flat in April, remaining at 3.8%, the same figure recorded in March by the Halifax House Price Index. However, prices were down by 0.2% when compared with the last quarter, the first fall since November 2012.

Martin Ellis (pictured), housing economist at Halifax, said: “House prices have stagnated over the past three months. Overall, prices in the three months to April were marginally lower than in the preceding three months; the first quarterly decline since November 2012. The annual rate of growth remained at 3.8% in April, the lowest rate since May 2013.”

Halifax said the number of UK home sales had stabilised in early 2017. Sales in March were very similar to the levels recorded in both January and February, at 102,810.

Overall, sales in the first three months of the year were 6% higher than in the final quarter of 2016. After analysing figures from HMRC, the lender found the level of sales in the first three months of this year was closely in line with the monthly average during 2014-2016.

Ellis added: “Housing demand appears to have been curbed in recent months due to a deterioration in housing affordability driven by the sustained period of rapid house price growth during 2014-16. Signs of a decline in the pace of job creation, and the beginnings of a squeeze on households’ finances as a result of increasing inflation, may also be constraining the demand for homes.”

Ellis believed the current low mortgage rate environment, combined with an ongoing acute shortage of properties for sale, would underpin house prices over the coming months.

Prolonged stagnation

Jonathan Samuels, chief executive officer of specialist property lender, Octane Capital, said he was hard-pressed to see any material uplift in activity in the property market until the autumn.

He explained: “The property market is experiencing an affordability hangover from the price growth of recent years, while ongoing Brexit negotiations and cross-Channel spats are also creating uncertainty. Combine the rising cost of living with muted wage growth, add in political and economic uncertainty, and a period of prolonged house price stagnation is a real possibility.”

He added: “Yes, the lack of supply will prevent prices from falling sharply, and record low mortgage rates will continue to provide support, but for now this remains very much a sideways moving market.”

Underlying problems

Jeremy Duncombe, director, Legal & General Mortgage Club, said it was important not to lose focus on the need to address the underlying problems in the housing market despite the current political upheaval.

He commented: “With the general election on the horizon, it is important that the progress our current government has made with the Housing White Paper does not fall down the priority list. Whatever the outcome, tackling our nation’s housing shortage needs to be at the top of the agenda for all political parties. The general election provides the perfect opportunity for the successful party to truly make their mark and restructure the housing market once and for all.”

How political parties prioritise the property market was also a concern for Ishaan Malhi, chief executive officer and founder of online mortgage broker Trussle.

He concluded: “It will be interesting to see where the housing crisis sits on the manifestos of the major parties, due out next week. The next government will need to offer a genuine and feasible solution to help regular people own their own homes.”

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